1099 No Info

[Randall]

I think this was discussed in the past. Client paid some individual subcontractors during the year. Doesn't have the ID and address. Person no longer doing any work for the client. Client can't track down the person. I know I told him many times to get the W9 before paying anyone. But here we are.

Do you prepare an incomplete 1099 with only name and amount paid? Do you NOT prepare the 1099? Do you still take the deduction on client's business return. I seem to recall some saying he is still entitled to the deduction and some saying they would not take the deduction.

The new forms with the question about 1099s comes into play as well.

[rfassett]

Pick your poison. File the 1099 with incomplete information and subject your client to a penalty. Don't file a 1099 and answer the questions truthfully on the tax return and subject your client to at least an inquiry. Don't file a 1099 and answer the questions on the tax return untruthfully and subject yourself to penalties. I never will do the third option, but the other two depend on the client and either way, I inform the client what to expect. This comes back to that old cliche, "poor planning on your client's part should not constitute a crisis on your part". This is your client's doing and you have no ownership in it, so long as you have previously informed him/her of the rules and consequences of not following those rules.

All that said, my firm prepares a boat load of 1099's for our clients and I have always found it amazing how quickly they can track down the person when I remind them of the rules. The conversation goes something like this: "Mr. Client, since you paid the contractor before gathering all of the info and you can not find him now to get the info, I have to check a box on your tax return that says that you should have filed 1099's but didn't. How do you think the IRS is going to interpret that, Mr. Client". Mr. Client grumbles, "Let me see what I can do." We hang up the phone and I set my timer. The phone usually rings within 5 minutes with Mr Client calling in the missing info. It's a miracle I tell you, a miracle!